Obtaining business benefits from IT: factors that influence the adoption of benefit realisation methodologies in New Zealand organisations

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Abstract

Almost without exception organisations have become reliant on Information Systems (IS) and Information Technology (IT) applications. Although competitive advantage, task efficiency and effective information management are considered to be among the major drivers for investing in IS/IT, recognising, valuing and realising these expected business benefits from their investments has proved to be a complex task for organisations. The track record of the IS/IT industry shows that there are high rates of project failures, budget overruns and cancellations, resulting in the so-called IT productivity paradox. Researchers argue that the current evaluation techniques (primarily financial) are insufficient to identify, track and evaluate benefits obtained through IS/IT projects. Therefore they encourage organisations to employ non-financial techniques that are apparently more suitable for IS/IT investments. There is still much debate, however, concerning the efficiency and effectiveness of the current evaluation techniques in terms of satisfying the IS/IT investment evaluation criteria.Benefit realisation (BR) approaches are among the non-financial techniques suggested by some in order to facilitate organisations to track, identify, measure and optimise business benefits from IS/IT projects. It appears, however, that most organisations worldwide have failed to change their practices, in part due to managerial perspectives and uncertainty of the effectiveness of BR models.The situation in New Zealand in relation to BR is unknown. This research therefore focuses on analysing the perspectives of IT and business/finance managers' towards their current IS/IT practices. Thereby to investigate the influence of three key factors, awareness, use and effectiveness of BR models those were identified from past studies, in New Zealand business context.In order to assess these factors, this exploratory study employed a positivist cross-sectional survey approach and selected five hundred IT-enabled New Zealand organisations across a variety of industry sectors, sizes and localities as the main sample. The results describe local perspectives on current IS/IT evaluation practices and on formal BR models in use. The report further compares and contrasts IT and finance managers' views towards organisations' current IS/IT practices and BR approaches. Finally concludes with recommendations for practice and implications for further research.Although the survey received relatively low levels of response, some preliminary outcomes are evident. The main insight obtained through this study is that among the responding organisations, awareness of formal benefit realisation and use of formal BR models are fairly low. In spite of this low awareness, there is some evidence of the presence of BR practice among nearly one-third of IT respondents and almost half of finance respondents, who indicated the use of in-house developed models. Some of the in-house models encompass important aspects of formal BR approaches. However the extent of their use varies significantly.Many of the responding organisations, in acknowledging their limited awareness of BR, indicated a desire to know more about the formal methods available. Moreover this research's findings are consistent with the similar studies conducted in Australia and UK. Therefore this study emphasises the need for improvement of NZ organisations' current IS/IT practice by incorporating a BR approach in order to better optimise business benefits from IS/IT. This study recommends that organisations identify the missing links in their current practices through a conceptual framework suggested here and to improve their awareness (and likely adoption) of BR in order to better optimise their business benefits and justify their investments in IS/IT.